Correlation Between Avient Corp and Harmony Gold

Can any of the company-specific risk be diversified away by investing in both Avient Corp and Harmony Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Avient Corp and Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avient Corp and Harmony Gold Mining, you can compare the effects of market volatilities on Avient Corp and Harmony Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Avient Corp with a short position of Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Harmony Gold.

Diversification Opportunities for Avient Corp and Harmony Gold

0.15

Correlation Coefficient

Avient Corp  Harmony Gold

Average diversification

The 3 months correlation between Avient and Harmony is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining and Avient Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Avient Corp are associated (or correlated) with Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Avient Corp i.e., Avient Corp and Harmony Gold go up and down completely randomly.

Pair Corralation between Avient Corp and Harmony Gold

Given the investment horizon of 90 days Avient Corp is expected to generate 6.22 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Avient Corp is 1.91 times less risky than Harmony Gold. It trades about 0.03 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  375.00  in Harmony Gold Mining on September 26, 2024 and sell it today you would earn a total of  575.00  from holding Harmony Gold Mining or generate 153.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.52%
Values	Daily Returns

Avient Corp  vs.  Harmony Gold Mining

Avient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Harmony Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Avient Corp and Harmony Gold

The main advantage of trading using opposite Avient Corp and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, Harmony Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Harmony Gold will offset losses from the drop in Harmony Gold's long position.

The idea behind Avient Corp and Harmony Gold Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.